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The Truth About Co-ops

A proposal in the state legislature would allow electric cooperatives in Kentucky to sell services in addition to electricity.

Electric co-ops strongly support the bill. They say that if a co-op can offer an important service not easily available to its customers, it should be able to.

Any change raises questions. But the doubts over this legislation result from misconceptions about electric co-ops.

The proposed change in the law comes after the Kentucky Supreme Court decided in November that Jackson Energy Co-op, based in McKee, could not sell propane gas.

The propane gas dealers association supported the lawsuit against Jackson Energy, saying the co-op competed unfairly against local dealers because it had access to low-cost loans.

The truth is that when a local electric co-op provides a commercial service other than electricity, it sets up the business so that the electric utility does not subsidize the nonelectric operation. This makes good business sense and it�s federally required. The co-op�s core electric utility business should be protected from any financial difficulties that could result from a new venture.

The truth is that local electric co-ops offer diversified services only when their customers, who own the co-op, feel they can�t get competitive quality or cost any other way.

Over the years, electric co-ops have stepped up to offer satellite TV when cable television wasn�t available in rural areas and programmers refused to make satellite signals available at any price. More recently, co-ops have been considering how they might help solve the lack of access to high-speed Internet connections in rural areas.

As local businesses themselves, electric co-ops support hometown entrepreneurs. As not-for-profit corporations, they don�t stand to profit from nonelectric activities. But as local institutions owned by the members they serve, co-ops act when those members ask. In the case of Jackson Energy, members asked if the co-op could provide a better deal on propane gas, and the co-op complied.

The truth is that changing the law so that co-ops could offer services not otherwise available or affordable is the simplest, least expensive, and most effective way to help Kentucky�s rural and small-town communities help themselves.

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